Tuesday, July 6, 2010

HAMP, HAFA, and other bits and pieces

Just wanted to touch on the short sale modification laws that Obama and crew are pushing through. (Which is I think in theory is great.) Once again though big banks and their Washington constituents have enough of a strangle hold to make these laws and programs weak and basically ineffectual.

To be on the bank's side for a minute, you can't really blame them, although the lending practices in some cases were predatory, they did lend someone money, and it is really only fair that as much of that money as possible be returned.

Short answer...HAMP is a program designed to help homeowners who are behind, and under water, re modify their loan, (in some cases with debt forgiveness, but much more rarely than the wording would imply.) However I have heard of it happening, and it has helped people stay in their homes. It is not a simple process though, and many times as it drags on, and the mortgage is not being paid, (which is a pre-requisite, paying your mortgage can get you booted from the program.) It pulls the property dangerously close to foreclosure.

Now what HAFA has tried to do, is simple streamline a snarled short sale process, and force banks to respond more like professionals, and less like a loan shark from Canarsie. I think in some ways it has done that. If you have followed the rules, and attempted to re modify, your existing loan, and have been unable to do so, HAFA can work in getting your home short sold.

One of the issues, besides the wishy-washy wording, which keeps the banks able to do pretty much whatever they want, is the fact that while in HAMP, you are unable to list your home and try to sell it. So in many cases, homes that may have been able to be short sold, were pulled off the market, while banks in the glacier pace they all seem to move in, attempted to change mortgages so someone now struggling, could stay in their home.

The problem seems to be, that if it is a situation, like a lost job, a loan modification won't help. You can't get water from a stone, but again, banks seem to lack this common sense, and force a mortgagor to go this whole process, before relenting to the short sale.

And in their unending quest on Capitol Hill to help, they unwittingly created a whole new bunch of piranhas.

The wording in the HAFA guidelines states that agent commissions are protected up to six percent of the transaction unless the servicer chooses to retain “a vendor to assist the listing broker with the sale” and if a vendor is retained, “this vendor must be paid from the commission.”

Well now every where you look, there are these "short sale vendor companies."

Notice how the press releases proclaim these companies are creating these divisions to help the servicers comply with HAFA. I guess they didn’t read that it was supposed be the agents they were assisting. I hope that they do make the short sale process easier, but the drafters of the HAFA program (with recommendations from the servicers) shouldn’t have tried to be cute with their wording in HAFA by guaranteeing a 6% commission unless a vendor is hired to assist the broker.

We'll see, all three of my short sales started before these laws went into effect, so I have not had the pleasure of dealing with a short sale vendor. But I will gladly give a percent away if they are doing all the HUD, bank paperwork, hardship letter, financial statement crap, and have an in with a negotiator.

I will list, show, market and sell. That is what I get paid to do. I just have a feeling that these "companies" are going to know very little about how to make this process smoother, and it will turn out to be another annoying step in an already very convoluted process.


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